Coinbase is accused of failing to register its staking offerings with the Securities Departments of the 10 states – Alabama, California, Illinois, Kentucky, Maryland, New Jersey, South Carolina, Vermont, Washington and Wisconsin.
The states’ regulators sent a show cause notice to regulators, meaning Coinbase now has 28 days to justify why it should not be ordered to stop selling unregistered securities in each state.
“This action will protect consumers and investors to ensure they can make informed and safe decisions in Illinois and across the nation,” said Illinois Secretary of State Alexi Giannoulias.
The 10 states’ legal action against Coinbase was filed hours after the Securities and Exchange Commission (SEC) charged the company with violating securities laws.
The suit alleges that since 2019, Coinbase has made billions of dollars unlawfully facilitating the buying and selling of crypto asset securities and exposing investors to “significant risk.”
Coinbase CEO Brian Armstrong said the SEC complaint “is exclusively focused on what is or is not a security” adding that the company is “confident in our facts and the law.”
Back-to-back lawsuits against Binance and Coinbase, two of the world’s largest crypto companies, have caused turmoil in the crypto sector.
Coinbase shares fell more than 12% on Tuesday alone, while Binance saw investors yank nearly $800 million from its platform in the span of 24 hours.